United Kingdom: House prices' increase softens in July due to supply-side measures
July 2, 2014
According to the Nationwide Building Society (NBS), home prices in the U.K. rose a meager 0.1% over the previous month in July, which marked the 14th consecutive monthly increase, although it was the slowest rise since April 2013. The figure came in below both the 1.0 % rise recorded in June and the 0.5% increase the market had expected. On an annual basis, home prices rose 10.6% (June: +11.8% year-on-year), which marked the lowest increase in four months. As a result, the average house price was GBP 188,949 (July 2013: GBP 170,825), marking the highest level on record.
Despite that the figure took the markets by surprise, developments in the last month explain the slowdown in the price increases: The introduction of the Mortgage Market Review measures in April, which tightened conditions over mortgage lending, were, according to NBS, partly behind the slowdown. NBS added that, in the long term, the evolution of housing prices will depend on the supply-side developments, suggesting that the recent implementations of financial regulations regarding mortgage-related lending are expected to soften the pace of increases in housing prices.
According to the Q2 2014 quarterly release, the latest one available, NBS data showed that, geographically speaking, the strongest increases in prices are still in the city of London, where the average house price rose 25.8% over the last 12 months. This is markedly higher than the 11.5% rise seen in the U.K. as a whole. Only two regions other than London saw higher-than-average price increases: Outer Metropolitan London and Outer South East.